Wall Street followed the FTSE and European stock markets in opening higher on Friday. (Michael M. Santiago via Getty Images)
The FTSE 100 (^FTSE) and European indices continued their positive run on Friday as the UK economy grew by a better-than-expected 0.6% between January and March. Wall Street followed suit, pushing higher in New York after economic data this week supported bets of interest rate cuts.
According to the Office for National Statistics (ONS), services output was up by an estimated 0.7%, while production output grew 0.8%. Meanwhile, construction was down 0.9%.
This rise in GDP means that the economy is no longer in a technical recession, after activity fell in the third and fourth quarters of last year.
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London’s benchmark index was 0.7% higher on the day, jumping passed the 8400 point mark for the first time
Germany's DAX (^GDAXI) rose 0.4% and the CAC (^FCHI) in Paris headed 0.3% into the green
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The 0.6% growth registered in the first three months of the year was higher than forecast, with the green shoots seen in January and February flowering into a stronger growth spurt in March.
"Confidence breeds more optimism, and with the economy showing signs of repairing and the FTSE 100 rallying higher, the glass half full sentiment is settling in. The blue-chip index has powered higher in early trade and set fresh records, after a sheen of positivity has descended on the UK."
Roblox (RBLX) only came public in 2021, and its stock has fallen from a high above $130 a share in November of that year to around $30 now. That’s as its annual sales growth rate has moderated into the mid-twenties percentage range.
It feels like the jury’s still out on whether the Roblox craze ends up being a flash in the pan or a lasting trend. It’s tempting as an investor to buy what you know, as Warren Buffett has famously said. And when it comes to trends that we interact with, see, and judge on a regular basis, we develop opinions.
But what if the trend you know ends up being just a fad?
Workers at Morrisons are set to go on strike in a dispute over pensions, it has been revealed.
Unite the Union said almost 1,000 of its members working in Cheshire and Wakefield as warehouse stock controllers, canteen staff and administrators voted to take industrial action.
They will strike from 23 May to 26 May and again from 13 June to 16 June.
Unite general secretary Sharon Graham said:
“Unite is focused on our members’ jobs, pay and conditions and these unmerited changes to workers’ pensions will leave our members worse off every month.”
Changes to pension contributions could leave workers £500 worse off.
LaToya Harding
Best savings accounts that offer above inflation rates
UK households are on the lookout for every little way to make their money go further amid the cost of living crisis, and savings accounts might help.
After years of low rates, high-yield savings accounts are having a moment as the Bank of England has kept interest rates at a 16-year high of 5.25%. While homeowners face higher mortgages, there is a silver lining in higher borrowing costs as consumers can now find UK savings accounts that offer more than inflation.
The UK rate of inflation came in at 3.2% in March, the lowest since September 2021, according to figures from the Office for National Statistics (ONS).
Savers should make sure they shop around to find the best deals and check what rate they are on – as they could still be sitting on a product that does not beat inflation.
The main factor you should be aware of when choosing a savings account is the difference between easy access and fixed term.
In a nutshell, easy access accounts allow you to access your money when you need it. Fixed term, as the name implies, are accounts where you can’t access your cash for the duration of the deal. They usually offer better rates but you must be comfortable with the idea of not touching your savings for a long period of time, usually between one to five years.
06/11/15 FILE PHOTO Jaguar Landrover report £157 million loss (Rod Kirkpatrick)
Jaguar Land Rover has posted its highest ever yearly sales and its biggest profit in almost a decade.
The luxury carmaker reported £29bn revenues in the year to March, over a quarter higher than the previous year, thanks to record sales of its Range Rover vehicles.
Around 133,000 vehicles had been ordered at the end of the financial year, three quarters of which were for Range Rover, Range Rover Sport and Defender models.
Pre-tax profit came in at £2.2bn, the highest amount since 2015.
LaToya Harding
Huw Pill: Clear signal of rate cut from downward inflation path
The Bank of England’s chief economist Huw Pill has said Threadneedle Street has sent a “relatively clear signal” on by recent falls in inflation.
BOE'S PILL: MPC HAS SENT A RELATIVELY CLEAR SIGNAL THAT THE BANK RATE CAN BE CUT WHEN THERE IS SUFFICIENT EVIDENCE OF A DOWNWARD PATH IN PERSISTENT COMPONENTS OF INFLATION.
Looks like the UK economy momentum will keep on going next quarter...
The UK economy is likely to keep growing during the current quarter, according to the National Institute of Economic and Social Research (NIESR).
They have predicted that GDP will increase 0.6% in the April to June period.
NIESR said:
"The fact that the UK’s GDP growth transitioned into positive territory after experiencing the shallow recession in the second half of 2023 is encouraging.
"However, the UK economy has largely flatlined following the initial stages of post-pandemic recovery. To escape the low-growth trend into a new and sustained era of high output growth requires structural changes and public investment.
"We expect that monthly GDP will continue its momentum in April, growing by 0.1 per cent relative to March, driven by growth mainly in services and production, particularly agriculture.
"Indeed, the S&P Global/CIPS UK services PMI reported an optimistic balance of 55.0 in April up from 53.1 in March. In line with this positive sentiment, we now forecast GDP to grow by 0.6 per cent in the second quarter of 2024, mainly driven by services sectors."
LaToya Harding
Anglo American rises after Rio Tinto mulls offer
Shares in the mining sector were higher on Friday amid reports that Rio Tinto (RIO.L) had considered an offer for rival British miner Anglo American (AAL.L), which is now BHP’s (BHP.L) £31bn takeover target.
Rio “management had not ruled out making a play for part or all of the mining group and continued to study the day-to-day situation", the Australian Financial Review reported.
Anglo has turned down BHP’s proposal, saying it was opportunistic and significantly undervalued the British company. Under the UK’s takeover rules, BHP has until May 22 to make a formal offer.
“Shares in Anglo American are up on a report that Rio Tinto also considered a bid following BHP’s rejected offer. M&A speculation is helping to keep Anglo shares supported at the moment,” Victoria Scholar, head of investment at Interactive Investor, said.
BHP and Rio have a close working relationship at Escondida and Resolution Copper. One option for Rio is to informally assist BHP’s bid for Anglo by acquiring the assets that BHP does not want, such as Anglo’s diamond business, AFR wrote.
Glencore is also studying options for a possible approach for Anglo, Reuters reported earlier in the month, a move that could spark a bidding war.
Offshore rig La Gaviota, Bermeo. Bizkaia, Basque country, Spain (Javier LARREA)
Oil prices rose on Friday, after two days of gains, as US jobs data supported the case for Federal Reserve rate cuts this year.
Brent crude (BZ=F) the international benchmark, rose 0.4% to push above $84 a barrel after a two-day climb that added about 1%. This was after having exceeded the 100-day moving average. US-produced West Texas Intermediate neared $80.
The Organisation of Petroleum Exporting Countries and its allies (OPEC+) are due to meet early next month to decide on output in the second half.
“With crude oil prices now trading over $10 a barrel off their highs, we could not rule out some speculative buying,” Citigroup Inc. analysts Max Layton and Francesco Martoccia wrote in a note. However, “the right strategy in this balance between geopolitical risks and loosening fundamentals is to sell any rally.”
LaToya Harding
TSM April revenue rises 60%
Taiwan Semiconductor Manufacturing Company’s (TSM) April revenue jumped nearly 60% year-on-year, as the firm rides a wave of sustained demand for the advanced semiconductors used in artificial intelligence (AI) hardware.
The world’s largest contract chipmaker said consolidated revenues for April were approximately TWD236.02bn (£5.7bn/$7.2bn), an increase of 59.6% from April 2023. This compares with a 34.3% on-year jump in March 2024.
The company is Nvidia’s (NVDA) sole manufacturer for the most advanced training chips. TSMC also fabricates semiconductors for Apple (AAPL).
Last month, TSMC announced its newest semiconductor process, advanced packaging, and other technologies for powering the next generation of AI innovations.
"We are entering an AI-empowered world, where artificial intelligence not only runs in data centres, but PCs, mobile devices, automobiles and even the internet of things," said CEO C.C. Wei.
LaToya Harding
Rightmove: UK property sector will improve this year
Rightmove has said that the UK property market will improve this year, as customer numbers rise compared to 2023.
The UK’s largest property portal expects the number of customers to rise 2% year-on-year, compared to a previous forecast of a “slight decrease”.
It said that while ongoing high mortgage rates and long completion times on transactions continue to weigh on the market, customers are “now increasingly looking to transact”.
Sales agreed between January and April came in 17% higher than the same period last year, with 1.1 million sales forecast to take place over this year.
The company said its house price index indicates annual house price growth of 1.7%, the highest for 12 months.
LaToya Harding
Homes with investment potential
There’s a lot to consider when investing in bricks and mortar – whether you’re after a steady income stream, long-term growth or a quick profit and if you plan to live in the property while it pays its way.
Then you’ll need to research locations, rental demand and yields and crunch the numbers to ensure that income exceeds expenses by a comfortable margin. These properties could present some great investment opportunities.
Money markets have lowered the odds of the Bank of England cutting interest rates next month.
Bets on a June rate cut now stands at 48%, while there is a 52% possibility that Threadneedle Street holds rates at 5.25%.
Yesterday, the decision stood at 55% chance of a cut in June.
It comes as the BoE left rates on hold yesterday, with two policymakers voting for a cut.
Derek Halpenny, head of research for global markets at financial group Mitsubishi UFJ, said:
"Most of the key guidance comments from Bailey and Broadbent in the press conference and again from Bailey in a Bloomberg TV interview after the press conference were clear in signalling rate cuts are coming.
"Mostly notable was Bailey’s Comment that the monetary stance would “likely” need to be made less restrictive and “possibly more so than currently priced into market rates”.
LaToya Harding
Lower treasury yields see gold prices surge
In early Friday trading, gold prices surged by close to 1%, buoyed by lower treasury yields and a weakened dollar.
Prices are set to conclude the week with gains following two consecutive weekly losses.
Ricardo Evangelista, senior analyst at ActivTrades, said:
“These upward movements can be largely attributed to evolving expectations regarding the Federal Reserve's future actions, with analysts now leaning towards at least two rate cuts in 2024.”
“The latest impetus for this shift occurred on Thursday, when US jobless claims surpassed expectations, amplifying sentiments stirred by last week's disappointing non-farm payrolls report and further exposing vulnerabilities in the American labour market.”
“Against this backdrop, the Federal Reserve is encountering diminishing leeway to maintain higher rates for an extended period, with this changing dynamic auguring well for the value of the non-yielding precious metal.”
LaToya Harding
Lidl announces third pay rise in 12 months
Lidl has announced that it is raising pay for the third time in a year. The German discounter is increasing pay for hourly-paid colleagues to a minimum of £12.40 across the country, up from £12.
In London, colleagues will see entry level pay rise to £13.65, up from £13.55. The new base rates equal the best hourly pay in the sector and will ensure that the discounter continues to reward colleagues with industry-leading pay.
The latest move represents an investment of over £2.5m, following a £37m investment in March 2024, as well as an £8m raise in September 2023, bringing the total investment in pay over the past 12 months to nearly £50m.
Ryan McDonnell, CEO at Lidl GB, said:
"As we continue to expand, we are welcoming more customers and attracting more colleagues into the business every day. It’s absolutely right, therefore, that we continue to offer industry-leading pay”.
LaToya Harding
British Airways owner hails strong quarter
File photo dated 09/10/19 of British Airways planes at Heathrow Airport. The owner of airlines British Airways and Aer Lingus has said its earnings have soared in recent months thanks to higher sales, lower fuel costs and stronger demand across its airlines. It reported an operating profit for the first three months of the year of 68 million euro (£58.5 million), up from the nine million euro (£7.7 million) reported this time last year. Issue date: Friday May 10, 2024. (Steve Parsons, PA Images)
International Consolidated Airlines Group (IAG.L), owner of airlines British Airways and Aer Lingus, has said its earnings have soared in recent months thanks to higher sales, lower fuel costs and stronger demand.
It reported an operating profit for the first three months of the year of €68m (£58.5m), up from €9m last year.
It was boosted by increased demand over the Easter holiday and added that it was seeing strong summer bookings.
"Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvement to both revenue and operating profit," Luis Gallego, chief executive, said in a statement.
He added that IAG's exposure to the Middle East was very small so it hadn't seen a big impact from the conflict there.
Shares were 1.1% higher on the back of the news.
LaToya Harding
Pound rises as UK economy grows
The pound (GBPUSD=X) is currently up against the dollar as the UK economy exited recession at the start of this year.
Sterling has risen 0.1% versus the US greenback to $1.2531, even after Andrew Bailey, governor of the Bank of England (BoE) pointed to interest rate cuts later this year.
The pound was also up 0.1% against the euro, trading around €1.162.
LaToya Harding
FTSE hits fresh high
The FTSE has reached another all-time high in London today, surging passed the 8400 point mark for the first time, hitting a new intraday high of 8431 points.
London's benchmark index has been on a strong rally since mid-April, and is on track for its third weekly rise in a row. It has gained 9.2% so far this year.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:
"Confidence breeds more optimism, and with the economy showing signs of repairing and the FTSE 100 rallying higher, the glass half full sentiment is settling in. The blue-chip index has powered higher in early trade and set fresh records, after a sheen of positivity has descended on the UK."
Meanwhile, Victoria Scholar, head of investment at Interactive Investor, said:
“After the FTSE 100 hit a record high for the fourth straight session on Thursday, the UK index has opened higher yet again and is potentially on track to close at another all-time high.
LaToya Harding
UK economy growth better than G7 rivals
The British economy has grown faster than its G7 rivals at the start of this year. Compared to the 0.6% growth recorded in January-March, here is how the others performed:
The US rose 0.4%
Germany rose 0.2%
France rose 0.2%
Italy rose 0.3%
Canada is estimated to have also grown by 0.6% and Japan is predicted to have grown by 0.2%.
LaToya Harding
UK construction sector remains weak
File photo dated 24/07/23 of a construction worker on a building site near South Bank, London. The UK's construction sector contracted heavily last month as the housebuilding sector had one of its worst months since 2009, an influential survey has suggested. Companies said that projects to build homes were being cut back as demand weakens and the cost of borrowing rises. Issue date: Thursday October 5, 2023. (James Manning, PA Images)
Construction output in Britain fell by 0.9% in January to March period, for the second quarter in a row. This means construction is in recession.
Output is 0.7% lower than the same quarter a year ago, the ONS said on Friday.
The fall reflects a decline in new work of 1.8% driven by private commercial new work, which fell by 5.3%.
However, repair and maintenance increased 0.3% due to housing associations re-directing their budgets towards repairs and upgrading “to deal with problems such as damp arising from tenants using less heating because of the higher cost of living”.
Wet weather also dampened construction activity, as storms kept workers off building sites.
Nicholas Hyett, investment manager at Wealth Club, said:
"Construction remains the one area of weakness, particularly in the commercial sector. That’s no surprise.
"Real estate is particularly exposed to the effect of higher interest rates, and the upheaval of the pandemic is still rocking the office and retail sector - with increased home working and online shopping permanently changing demand. That’s not a trend that’s unique to the UK."
LaToya Harding
Chancellor and PM on GDP figures
Here's what Jeremy Hunt and Rishi Sunak had to say on the back of the news that the UK economy grew by 0.6% in the first quarter of this year.
The chancellor said:
"There is no doubt it has been a difficult few years, but today's growth figures are proof that the economy is returning to full health for the first time since the pandemic.
"We're growing this year and have the best outlook among European G7 countries over the next six years, with wages growing faster than inflation, energy prices falling and tax cuts worth £900 to the average worker hitting bank accounts."
The prime minister said:
The economy has turned a corner. Today's news proves that. We know things are still tough for many people, but the plan is working, and we must stick to it.
After a tough period with the pandemic and the energy shock, today’s figures are proof that the economy is returning to full health.
And more important than that, the IMF say our long term prospects are the strongest of any major European economy over the coming years. https://t.co/4FxeNBo40u
— Office for National Statistics (ONS) (@ONS) May 10, 2024
LaToya Harding
Will Biden’s new China tariffs spark market volatility?
President Joe Biden speaks during an event to celebrate the 2023 WNBA champion Las Vegas Aces, in the East Room of the White House, Thursday, May 9, 2024, in Washington. (AP Photo/Evan Vucci) (Evan Vucci, Associated Press)
Joe Biden’s reported fresh China tariffs may trigger short-term market volatility, Nigel Green at deVere Group has warned.
It comes as Bloomberg first announced that the US president is set to announce new tariffs on China as soon as next Tuesday, targeting strategic sectors including electric vehicles, semiconductors and solar equipment, according to two people familiar with the matter.
Existing levies are expected to also be maintained.
Green said:
“The imposition of tariffs on these critical sectors signals a potential disruption to global supply chains.
“Companies heavily reliant on imports from China for components like batteries and solar cells are likely to face increased costs, impacting their profit margins.
“This uncertainty can be expected to lead to a knee-jerk sell-off in stocks of companies directly involved in these industries, such as green-tech, as investors seek to mitigate risk.”
The news builds on the president’s calls last month to extend tariffs on Chinese steel and aluminium.
LaToya Harding
Asia and US stocks
Stocks in Asia rose overnight and are on course for a third week of gains. The Nikkei (^N225) rose 0.4% on the day in Japan, while the Hang Seng (^HSI) surged 2.3% in Hong Kong.
The Shanghai Composite (000001.SS) flat at the end of the session with blue-chip shares marginally down as geopolitical concerns weighed on sentiment following a trade restriction list issued by the Biden administration and potential new China tariffs.
Across the pond, the Dow Jones (^DJI) rose 0.9%, closing at 39,387.76, while the S&P 500 (^GSPC) was up 0.5% at 5,214.08 and the tech-heavy Nasdaq (^IXIC) climbed 0.3%, reaching 16,346.26 at close.
In the bond market, the yield on the 10-year Treasury bonds eased to 4.45% from 4.50% late on Wednesday.
LaToya Harding
Coming up...
Good morning, and welcome back to last markets live blog of the week. Today is GDP day in the UK, but we have lots of other news to keep you busy.
Here's a quick look at what's on the agenda for today:
7am: Trading updates: International Airlines, S4 Capital
7am: UK GDP report for March, and the first quarter of 2024
7am: UK trade report for March
12.30pm: European Central Bank to release accounts of its last monetary policy meeting
3pm: University of Michigan’s survey of US consumer sentiment
Watch: How does inflation affect interest rates?
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China's home prices will fall at a faster pace this year with worsening slumps in property investment and sales, a Reuters poll showed, a sombre reminder to policymakers as they redouble efforts to revive the crisis-hit property sector. The poll showed new home prices would fall 5.0% in 2024, versus a 0.9% decline tipped in a previous survey in February. The poll was conducted between May 10 and May 17, and is likely to have only partially taken into consideration Friday's government announcement of support measures to stabilise the property market.
Federal Reserve Chair Jerome Powell gave the commencement address Sunday at Georgetown University Law Center—and didn’t mention inflation, interest rates, or the economy once. In his remarks, Powell apologized for not attending in person and reflected on his own graduation from Georgetown Law 45 years ago. Powell stressed the inevitability of fundamental change in the workplace and life, much of it driven by technology, and urged graduates to take risks so that they keep growing—personally and professionally.
The Federal Reserve slashed its benchmark interest rates to combat the sudden recession. “The 30-year mortgage rate was at a record low, the lowest ever recorded ... 2.65%, that’s what your mortgage rates were.” The question of who can best steer the U.S. economy could be a deciding factor in who wins November’s presidential election.
China's fiscal revenue slipped 2.7% in the first four months of 2024 from a year earlier, after a 2.3% slide in the January-March period, in a further sign of an uneven economic recovery. Fiscal expenditure rose 3.5% in the first four months, versus a 2.9% gain in the first quarter, according to finance ministry data released on Monday. For April alone, fiscal revenue fell 3.7% against a 2.4% decline in March, while fiscal spending was up 6.1%, compared with March's 2.9% fall, according to Reuters' calculations based on the ministry data.
NEW YORK (Reuters) -The Nasdaq closed at a record high on Monday and gold jumped to an all-time high as investors weighed hawkish statements from the Federal Reserve against evidence of cooling U.S. inflation. The tech-heavy Nasdaq led the three major U.S. stock indexes with a boost from chips, as Nvidia Corp advanced ahead of its closely watched earnings report, expected on Wednesday. The S&P 500 finished the session with a modest gain, while the blue-chip Dow dipped below 40,000 after closing on Friday above that level for the first time.
Last week, China unveiled "historic" steps to stabilise its crisis-hit property sector, although economic data indicated a patchy recovery for the world's second-largest economy. Stocks in Indonesia reversed course to trade 0.2% lower. A Reuters poll showed that the Bank Indonesia will likely keep its key interest rate on hold through the next quarter to support a weak rupiah.
Most of the time the flurry of economic statistics amounts to so much sound and fury, signifying nothing. But this week could be different. Wednesday’s inflation data could be a game-changer.
"These indexes indicate that supply availability had generally been improving since early 2023, but over the past couple of months, improvement has stalled," the New York Fed said in a blog post on Monday. The supply availability indexes will feature in the Empire State Manufacturing and Business Leaders surveys from June. The indexes are designed to measure how widespread supply disruptions are, understand if availability is improving, and track inflationary pressures.
The pound held steady on Monday as markets waited for April inflation data later in the week which is expected to show the rate of UK price rises falling back to the Bank of England's target. The pound has risen around 2% so far this month as the U.S. dollar has fallen on the back of weak growth and inflation figures, while British data has been stronger than expected. Data on Wednesday is expected to show that the UK's headline rate of inflation fell to 2.1% in April, down sharply from 3.2% in March, thanks mostly to a fall in the cap on household energy bills.
Iran’s supreme leader has announced a five-day mourning period, but there have been fireworks and cheering in the country since the death was confirmed
For a country sharing a long and disputed maritime border with China, The Philippines was seriously lacking in military force for protecting that border.
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